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Cash flow and business clarity

Profitable but cash is tight? Start with these checks.

Profit records economic performance. Cash pays wages, suppliers, tax and debt. The two move differently, sometimes for ordinary reasons and sometimes because the business model needs attention.

Written by Ricky Lecordier, Founder — INFIN8 Finance Group | Updated 22 July 2026 | 3-minute read

Customers owe you money

A sale can appear in profit before the customer pays. Growing revenue can make cash tighter when customers pay slowly and suppliers or staff must be paid first. Review aged receivables, overdue amounts, disputed invoices and customer concentration.

Stock and work in progress absorbed the cash

Inventory, materials and unfinished jobs can consume cash before they create revenue. Check stock days, obsolete items, project overruns and the gap between paying for work and billing the customer.

Debt principal does not appear as an expense

Interest affects profit. Repayment of loan principal reduces cash without reducing accounting profit. List every repayment and check whether the business can carry them in a normal month.

Tax timing is different from profit timing

GST, PAYG withholding, income tax and super obligations have their own due dates. Money collected or accrued for these obligations is not spare operating cash. Reconcile the tax account rather than relying on the bank balance.

Asset purchases and owner drawings changed cash

Vehicles, equipment, loan accounts and owner withdrawals can explain why reported profit does not remain in the bank. Separate business operating performance from financing, investing and owner transactions.

Use a short cash bridge

  1. Start with accounting profit for the period.
  2. Add back non-cash expenses such as depreciation.
  3. Adjust for movements in debtors, stock and creditors.
  4. Subtract tax payments, loan principal, asset purchases and owner drawings.
  5. Reconcile the result to the bank movement.

The bridge will not solve the problem, but it identifies the part of the business that needs a decision.

When finance may help

A defined, temporary timing gap may support a working-capital or invoice-finance discussion. Persistent negative operating cash, falling margin or dependence on new debt needs diagnosis before another facility is added.

Useful official guidance

The Australian Government's cash-flow guide recommends keeping financial records, planning cash movement and comparing the costs and risks of funding options.

Choose the response after you find the cause

T1 helps you identify what needs attention. The working-capital page explains the finance path when the gap is defined.

Start the complimentary assessmentExplore working-capital finance

General information only. This article does not replace accounting, tax, legal or credit advice for your circumstances.